Sun's former CEO Scott McNealy used to say nasty things about Intel's Itanium 64-bit microprocessor, a competitor to Sun's SPARC chip. But that was then, when Sun still thought it had to own the stack.
These days, it is less about the microprocessor and more about the system. Sun realizes that it is in the business of selling data center systems to data centers. And customers are asking for Xeon servers along with AMD, and SPARC servers, that Sun sells. And selling is a good thing.
And the fact that Intel will promote Solaris along with Linux and other operating systems is good for Intel because it encourages sales of servers.
What this alliance shows is that Intel has made a lot of progress in catching up to AMD's lead in low-power consuming servers. Otherwise Sun would not be getting requests from customers for Intel hardware.
What this alliance needs is the addition of Hewlett-Packard, that would worry IBM. HP has a strong IT services arm. Then we'd see a West Coast/East Coast rivalry that could become very interesting to watch.